Toby Shor, et al v. Zephyrus Corporation

Filing

UNPUBLISHED OPINION FILED. [13-40456 Affirmed ] Judge: JLW , Judge: CH , Judge: SAH Mandate pull date is 04/04/2014 [13-40456]

Case: 13-40456

Document: 00512561845

Page: 1

Date Filed: 03/14/2014

IN THE UNITED STATES COURT OF APPEALS
United States Court of Appeals
FOR THE FIFTH CIRCUIT
Fifth Circuit

FILED
No. 13-40456

March 14, 2014
Lyle W. Cayce
Clerk

TOBY SHOR; SEASHORE INVESTMENTS MANAGEMENT TRUST,
Plaintiffs - Appellees

v.
THE ZEPHYRUS CORPORATION

Defendant - Appellant

Appeal from the United States District Court
for the Southern District of Texas
U.S.D.C. No. 2:11-CV-329
Before WIENER, HAYNES, and HIGGINSON, Circuit Judges.
PER CURIAM:*
Zephyrus Corporation (“Zephyrus”) appeals an adverse judgment
entered on a jury verdict in a case where plaintiffs Toby Shor and Seashore
Investments Management Trust (“Plaintiffs”) sought to impress a constructive
trust on a boat titled in Zephyrus. Plaintiffs alleged that Paul Black had
created Zephyrus (owned by Black’s father) and used funds fraudulently
procured from Seashore Investments Management Trust to purchase the boat.

Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH
CIR. R. 47.5.4.
*

Case: 13-40456

Document: 00512561845

Page: 2

Date Filed: 03/14/2014

No. 13-40456
The jury agreed, and a judgment was entered in Plaintiffs’ favor essentially
awarding title to the boat to Plaintiffs. Zephyrus timely appealed.
We have carefully considered the pertinent portions of the record in light
of the parties’ arguments presented in their brief and at oral argument. We
conclude as follows:
1. The jury was not erroneously charged, and the jury’s verdict is
supported by sufficient evidence. See Flournoy v. Wilz, 201 S.W.3d
833, 836–37 (Tex. App.—Waco 2006), review granted, judgment rev’d
on other grounds, 228 S.W.3d 674 (Tex. 2007).
2. Zephyrus’s standing challenge that Shor did not have authority to
bring the bankruptcy trustee’s claims against Zephyrus, even if
correct, would not change the outcome of the case and, therefore,
would be harmless error. See Anchor Cas. Co. v. McGowan, 168 F.2d
323, 325–26 (5th Cir. 1948). Because the jury separately found that
Black had breached his fiduciary duty to Shor in her role as trustee
of Seashore Investments Management Trust, any error does not affect
the final judgment and is harmless.
3. Zephyrus’s argument, made for the first time on appeal, that Shor
ratified Black’s tortious conduct by entering into a restructure
agreement, is waived for failing to plead it as an affirmative defense
in the district court and obtain a jury finding on it. See Allied Chem.
Corp. v. Mackay, 695 F.2d 854, 855–56 (5th Cir. 1983). Even if not
waived, it is not supported by any evidence showing that Shor was
aware of Black’s fraud at the time she entered into the restructure
agreement. See Wise v. Pena, 552 S.W.2d 196, 200 (Tex. Civ. App.—
Corpus Christi 1977, no writ) (“Unquestionably, the key element
which must be proven to establish ratification and waiver of the
2

Case: 13-40456

Document: 00512561845

Page: 3

Date Filed: 03/14/2014

No. 13-40456
fraudulent conduct is that the ratifying party had full knowledge of
the fraudulent acts at the time he ratified these acts.”).
AFFIRMED.

3